It’s fair to presume NAFTA is not the sole cause of the increase in trade, but it is also fair to presume that NAFTA helped. Increased trade is a benefit to both parties, otherwise, the trade would not take place.

Trump now threatens to kill the trade golden goose and US farmers are in the crosshairs of the dispute. Any unraveling of NAFTA could hit deeply enmeshed cross-border food supply chains

Corn is the biggest of the US’s $17.7bn in agricultural exports to Mexico, a value that has risen fivefold since the countries signed the North American Free Trade Agreement. Mexico’s exports to the US have grown even faster to $21bn, led by fruits and vegetables such as lemons and avocados.

Farmers, traders and food executives on both sides of the border are therefore paying close attention to Donald Trump. The US president has pledged to revise Nafta, wall off the border and possibly slap Mexican imports with tariffs. Trade in agriculture could end up a casualty.

Trump has already withdrawn from the 12-nation Trans-Pacific Partnership, a trade deal with strong farm-belt support. He has called Nafta, which also includes Canada, “unfair” and a “catastrophe”.

The president’s comments suggest he is more concerned about manufacturing jobs than where food is produced. But US farm groups fear being targeted by Mexico in retaliation. Richard Feltes of commodities broker RJ O’Brien in Chicago, says: “The soft spot for Trump would be hitting back at America’s heartland.” Most states in the US corn belt voted for the president.

Unravelling Nafta could be complicated because US and Mexican food supplies have become deeply enmeshed. In the beef market, calves raised on pastures in Mexican states such as Chihuahua are sent across the border at about a year old. Texas feedlots fatten them, then US packing plants slaughter them. Cuts of beef such as chucks and rounds are shipped back to Mexican cities.

The top 10 companies exporting foodstuffs from the US to Mexico include trading houses such as Bartlett Grain, ADM, Cargill and CHS, as well as meat companies such as Tyson Foods and JBS, according to Panjiva, a trade data company. The top 10 companies shipping north include Driscoll’s, a berry grower; Grupo Viz, a Mexican meat supplier; Mondelez, the US snacks company; and Mission Produce, an avocado producer.

How important is trade to US agriculture? US agricultural exports averaged over $142 billion over 2013-15. Over the same period, the US enjoyed a $25 billion net agricultural trade balance. Based on the value of agricultural production, roughly one-third of what is produced by US farmers and ranchers is exported and for many commodities such as soybeans, wheat, and cotton, more than 50 percent of the crop is typically exported. Moreover, with a slowing population growth rate at home, more than 97 percent of the anticipated population growth over the next 35 years is anticipated to take place outside of US borders. Those facts explain why US agricultural interests have been such strong supporters of free trade agreements in the past.

US agricultural exports to China, Canada and Mexico averaged $63 billion over 2013-15, accounting for 44 percent of total agricultural exports. In addition, sales by US-owned food processing companies in Canada, Mexico, and China totaled more than $58 billion in 2014 and accounted for about 25 percent of sales of US-owned food processing companies worldwide.

Actions by President Trump to make good on campaign promises to raise tariffs on China exports to 45 percent would surely be met with countermeasures that could potentially devastate US agricultural exports. While some have argued that China would be unlikely to cut off food imports necessary to meet their growing consumer demand, those arguments ignore the fact that there are many other suppliers in the world – particularly in South America and the Black Sea Region – which have the capacity to ramp up production and exports to meet those demands. US farmers and ranchers would likely be the primary losers, particularly as China demand increases over the long run. The President-elect has also blamed NAFTA, particularly Mexico, for many of the economic woes facing the United States, and has threatened to renegotiate an agreement that has been in force since 1994 (and in the case of the Canadian-US free trade agreement since 1989). With a few key exceptions, trade in agricultural products under NAFTA is now free of tariff and quota restrictions. Bilateral agricultural trade between the US and Canada has grown at an annual rate of 7.3 percent since 1990 and averaged $43.7 billion over 2013-15. Bilateral trade between the US and Mexico has grown at an 8.3 percent annual rate since 1990 and averaged $37.7 billion over 2013-15.

Since the election, a number of farm leaders and Congressional members have sought to moderate the President-elect’s views on trade. Whether their views will alter his actions is thus far uncertain. In his book Peddling Protectionism: Smoot-Hawley and the Great Depression, Douglas Irwin recounts how economists at the time were almost unanimous in their opposition to passage of the Smoot-Hawley Tariff Act that raised tariffs on more than 20,000 imported goods. To that end, a petition signed by 1,028 American economists was presented to then President Herbert Hoover to veto the legislation. For US farmers (as well as US consumers) let’s hope the current President-elect heeds the warning more than did his predecessor.

Disputing Trump’s NAFTA “Catastrophe” with Pictures

President Trump and his trade czar, Peter Navarro, are moaning and groaning about NAFTA and the US trade imbalance with Mexico.

“NAFTA has been a catastrophe for our country; it’s been a catastrophe for our workers and our jobs and our companies,” said Trump on February 2.

Let’s investigate this allegedly catastrophic deal for the US with a set of pictures.

Manufacturing Employment

If anything, NAFTA stabilized or increased US manufacturing jobs for six or seven years due to an increase in bilateral trade.

The demise of US manufacturing jobs started in June of 1979, long before anyone could blame either Mexico or China.

US Balance of Trade in Goods with Mexico

Goods Trade with Mexico

It’s impossible to make a realistic case that NAFTA hurt the US.

Explaining Balance of Trade

The seeds of trade imbalances were sewn in 1971 when Nixon closed the gold window. The trade deficit rose, then skyrocketed.

Smoot-Hawley

Smoot-Hawley did not cause the Great Depression, but it certainly made matters much worse. In general, that’s precisely what tariffs do in every case.

No one wins trade wars. Both sides always lose something. In the case of unwinding NAFTA, Mexico would get hit harder, but US farmers would also pay a price.

Net it all out, and US farm losses will be much greater than manufacturing gains (if indeed any).

Manufacturing Employment as Percentage of Total Employment

Here’s an additional chart that shows how silly it is to blame NAFTA for the demise of manufacturing jobs.

The manufacturing percentage of nonfarm employment is under 8.5%, down from nearly 39% during WW II. If farm employment was factored in, the current percentage would be even lower.

Discounting war effects, there was a steady decline in the percentage of people employed in manufacturing from 1952 until 2009. That persistent decline has finally tapered off.

Trump is fighting a problem that no longer even exists! Perhaps he backs down again.

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Every country needs a bilateral agreement, stating that all those goods in which it happens to enjoy a nominal “trade surplus” vis a vis the other, can be traded free of tariffs. While every good in which it records a nominal “deficit”, is taxed to the sky…….

I note that corn ranks as the top food export to Mexico. Corn production is heavily subsidized by the US government, as are other food crops. See the news each year that Congress gets when it considers The Farm Bill, which is all about how much farmers in the US will be subsidized.
NAFTA opened up the Mexico market to US food exports, and put many of Mexico’s corn producers out of business. Many small farmers were forced to abandon their farms and move into cities to seek employment. Subsidized US exports have had the same effect on local farmers in many other countries after their markets were opened up to US and European food exports by international trade agreements. These effects go unreported when the benefits of NAFTA and other trade agreements are considered by most economists.
Another effect of US subsidies on Corn, Soybeans, Cotton, etc. is that GMO species dependent upon Glyophosate herbicides and produced in the US flood foreign food supplies and drive local strains of these plants out of production. This extends the monopolies held by the GMO patent-holders like Monsanto, increasing their market monopoly power over ever-greater stretches of our World.
“Free Trade” is often far from “fair” or “free”, and Free Trade Agreements may look wonderful from the point of view of an economist. But, from the point of view of local consumers and producers, and from the point of view of local health, these trade agreements may have major bad effects.

Wonder how many products go back and forth across the border before being the final product that consumers in either country purchase. The supply chain cannot be as simple as Trump suggests with a good made entirely in one nation.Corn may be grown in Mexico , made into a tortilla in Texas and sold in Mexico or a car may be made in iron may be mined in one country , converted to steel in another and turned into a car sheet in yet another. And in American made BMW’s the turbo charger comes from Japan. Forcing a company to source and buil entirely in one country will simply raise costs and lower productivity. Milton Friedman in his free to choose series of the 1970’s pointed to the lowly pencil and the complexities of building it and how many nations were involved. They should rebroadcast that series today.

Hi Mish. I admire your articles, the combination of logic of a matematician and an economist. I learn so much from you and have the utmost respect for you. Although, secretly I favor some protectionism, you have convinced me the benefit of open trade. Free trade is distorted by government subsidy to the item for export. Learning it from the documentary I watched years ago (LIFE AND DEBT), agriculture is heavily subsidized in the USA. I only speculate where the money for subsidy comes from – treasury sold to foreigners?
Cheers
Csaba Varga

We also sent them vehicles $75B, electrical machinery, $63B, ag equipment and other machinery $49B, mineral fuels $14B, optical and medical instruments $12B, ag products $21B. These are all 2015 figures.

I could care less about the woes of the US Farmers, they are highly subsidized by the Fed’s and pay a negligible amount of taxes. This includes property,sales,use and fuels. They then insure privately against loss, so they win no matter what and whine all the way to the bank.

Why should we care whether our GDP or value added commerce comes from food or manufacturing or services. I agree that many industries benefit from subsidies but you seem to be valuing some industries above others. Isn’t it better for a nation to achieve its growth by focusing on where it holds a competitive advantage?

Because the manufacturing jobs are higher paying jobs which are occupied by tax-paying Americans while Ag jobs involved many low-paying jobs usually performed by illegals who pay much less in taxes, with many undoc. workers likely paying no taxes at all but still drawing public benefits.

overly simplistic. depends on the role. there are high and low paying jobs in both. in some cases agricultural products are converted to bio-fuels or plastics A great many jobs at ADM require advanced skills and not held by undocumented workers.

The only subsidies to farmers in my area now, that I am aware of, is subsidized crop insurance. This mostly encourages farming marginal land. If a farmer has to depend on regular crop insurance payments, he’s going to be out of business.
There are no longer DCP and LDP payments to game.

We pay a reduced property tax on our farm ground, only about $30k yearly on 1,000 acres, a small farm now. Do other industries pay sales tax? We do get a sales tax exemption on some farm use items. I’m not sure what a use tax is, or why farmers should pay one. Why should we pay a fuel tax? It would seem counter productive to pave and maintain farms as roadways.

Former Secretary of Agriculture and crony capitalist Earl Butz made Ag what it is today with his “Get big, or get out” statement. He came up with the notion of increasing farm income though exports and use of corn for ethanol, mostly for his buddies at ADM, etc. This is attitude persists today, and that is why the FSA and ASCS offices seem to have their favorite farmers.

Since I am kind of a simple sob, I am not a favorite farmer, nor have we gamed the system enough to accumulate a huge amount of capital. Corn prices now are close to cost of production, and obviously, that’s not enough. Trump and his primitive economics could easily put us under.

After turning 70 yo last month I’ve dropped my work week to only 60-70 hours of physical labor. Can’t do much more, anyway. My hope now is that the Feds will have to bring back direct payments, and the Trump people that actually work will have to support me.

Good point.
Lower food prices on all the agriculture products farmed in USA would follow if there was tariffs between USA and Mexico.
Likewise Mexican agriculture products prices in Mexico would be lowered if the exports to USA woud be more difficult thereby lowering mexican inflation.
.
Most likely though both US and Mexico would want tariff-free trade in agriculture products so defending NAFTA with scares about higher prices for mexican lemons and lower profits for US corn farmers is not a winning argument.

A ban on planting genetically modified corn in Mexico is likely to continue for years as a slow-moving legal battle grinds on, said a top executive of U.S.-based seed and agrochemical company Monsanto Co.

Last week, a Mexican court upheld a late 2013 ruling that temporarily halted even pilot plots of GMO corn following a legal challenge over its effects on the environment.

“It’s going to take a long while for all the evidence to be presented,” Monsanto regional corporate director Laura Tamayo said in an interview. “I think we’re talking years.”

The impasse comes as yellow corn imports are expected to rise by more than a fifth next season on higher production costs and a weak peso, from about 15 million tonnes in the 2016/2017 cycle that ends in March.

While Mexico is self-sufficient in white corn used to make the country’s staple tortillas, it depends on imports of mostly GMO yellow corn from the United States for its livestock.

Several years ago, Monsanto submitted two applications for the commercial planting of GMO corn in Mexico. Both sought 700,000 hectares (1.7 million acres) in the northwestern state of Sinaloa, the country’s largest corn-producing area.

Both applications are still pending for Monsanto, the subject of a $66 billion takeover by Germany’s Bayer AG.

Mexico is the birthplace of modern corn, domesticated about 8,000 years ago and today the planet’s most-produced grain.

If new U.S. President Donald Trump upends the North American Free Trade Agreement as he has threatened and U.S. supplies are not longer available, Tamayo said Mexico might have to look to other major corn producers, like Argentina and Brazil.

Prominent Mexican politicians, including former President Felipe Calderon, say the nation should consider ending purchases from U.S. corn producers in favor of Brazil and Argentina if Trump applies new taxes on Mexican exports to its northern neighbor.

“But there’s no magic wand to do that,” she said. It would be “disastrous” in the short term to source from new South American suppliers since that would mean higher transport and other costs, she added.

To boost both yellow and white corn output in the near term, Tamayo said Monsanto was about a year and half away from introducing what it dubs “nano corn,” a conventional hybrid variety that she says is about 20 percent more productive.

Mexico imports 21 billion in agriculture products to USA and USA imports 17.7 billion in Agriculture products to Mexico.
.
Most likely scenario:
bilateral agreement between USA and Mexico that there are NO tariffs on agriculture products.
.
Scenario with 35% tariffs on agriculture products by USA and retaliation tariffs of 35% by Mexico:
USA gets 7.35 billion in tariff money from Mexican agriculture products and Mexico gets 6.29 billion in tariff money from USA.
End result:
US government can pay ALL the tariffs on behalf of US farmers and still has 1 billion dollars extra per year to spend on farm subsidies inside USA if 35% tariffs become reality (which I believe will NOT happen.)

Great Forbes article entitled “Renegotiating NAFTA Is A Good Idea – For Mexico” – January 29, 2017

“The truth is that NAFTA has been a rotten deal, not for the U.S. but for Mexico. Firstly, NAFTA did not establish a level playing field for agricultural production. It ended tariffs, but not subsidies. Mexico opened its borders to American agricultural exports, particularly corn. But America continued to subsidize the production of corn: between 1995-2014, corn subsidies totaled nearly $95bn. Coupled with America’s higher productivity, the subsidies made it impossible for Mexican farmers to compete. Agricultural employment dropped 19% between 1994 and 2007, a loss of about 2 million jobs, mostly in family farms. There was a corresponding increase in seasonal work, as agricultural production shifted to fruit and vegetable production, so the unemployment figures perhaps did not rise as much as might have been expected.”

So tariffs ended, but the U.S. continued its practice of subsidies, screwing Mexico. And then once the Mexican farmers were screwed, the U.S. multinationals went into Mexico and bought up their land. No wonder the workers came North. And the illegals are now sending home more money (untaxed) than Mexico is presently getting from oil.

“Mexico has become somewhat dependent on its migrants: it now receives more foreign currency from migrant remittances than it does from exports of crude oil.”

Diogenes – yes, you’re right. I wish Sir James Goldsmith was still alive. We sure could use another intelligent voice watching out for the average guy, and it didn’t hurt that he was wealthy too. Gave him more clout. Cheers.

Do you really think Trump is so inept at negotiating that he would jeopardize jobs in the U.S ? We can be sure that with the fools in govt. that made these trade deals were bad deals for the US and some constructive adjustments can’t be made. I think you are terrifying yourself that free trade will not exist after the adjustments only it will not only be free trade but fair trade. The same can be said of China. Do you not think that both China and Mexico will not make some reasonable concessions and if they don’t then maybe we should just walk away and let them stew in their own downturn for a few months and see if they won’t come begging to the bargaining table again. Where are they going to find anywhere to replace the US market ? Europe ? the rest of Asia ? Their own domestic market ? Maybe someday but now they need us. So let’s let the master negotiator do his job and see what happens. Even if the worse happens the US economy needs somehow to mend itself which means letting the great unwind happen and the reset occur. So I don’t see anything but good coming from fixing NAFTA and any arrangements made with China though there might be some short to medium term pain. I really enjoy your columns. You bring a very fresh intelligent viewpoint to our attention. Sincerely, Max Sent using Hushma

US corporate mission accomplished – with NAFTA, destroy a major source of employment in Mexico, farming, and cause a huge exodus of cheap, hard working labor to the US which can’t complain about working conditions and whose medical care and food supplementation is paid for by the US taxpayer.

How US Policies Fueled Mexico’s Great Migration
Impoverished by NAFTA, farmers of Veracruz crossed the border to work
The Nation – Jan. 4, 2012

When NAFTA was passed two decades ago, its boosters promised it would bring “First World” status for the Mexican people. Instead, it prompted a great migration north. – Oct. 11, 2014

Under Nafta, Mexico Suffered, and the United States Felt Its Pain
NYT – Nov. 24, 2013

“As heavily subsidized U.S. corn and other staples poured into Mexico, producer prices dropped and small farmers found themselves unable to make a living. Some two million have been forced to leave their farms since NAFTA. Although it has declined recently, jobless Mexicans migrated to the United States at an unprecedented rate of half a million a year after NAFTA.”

NAFTA flooded Mexico with cheap US Subsidized food. This destroyed the Mexican family farm and required more farm labor in the USA. Naturally we sent our Urban unemployed to fill those jobs….. ROFLMAO!!!! Ummm, no. The same Mexican farmers now have to cross into the US and work on our farms instead of theirs OR they can always join a drug cartel!!!

NAFTA destroyed our manufacturing which was an important part of our economy and destroyed the small Mexcican farmer.

Things arent better and anyone who pretends they are is folling themselves.

“Firstly, NAFTA did not establish a level playing field for agricultural production. It ended tariffs, but not subsidies. Mexico opened its borders to American agricultural exports, particularly corn. But America continued to subsidize the production of corn: between 1995-2014, corn subsidies totaled nearly $95bn. Coupled with America’s higher productivity, the subsidies made it impossible for Mexican farmers to compete.”

No way to realistically do that as there are a thousand ways to tilt the scales, from channelling own money at a loss into certain enterprise through to media persuasion by interested parties, through to political or business influence in the targeted country . Blatant subsidy is straightforward to spot, but the rest…

Mish should know this as he is on target with EU, he knows how the system is controlled.

Just standing behind it all in the name of Free Trade is not going to convince people, even those who agree with the principles of free trade. People, collectives/nations , trade what they want to, and when they don’t want to, don’t. Relatively free trade only happens within a country, and even then it is managed but under one set of rules, and one currency.

Trade with other countries is every other shade, which globalists will vaunt for the advantages of a mutual profit while ignoring the losses that are not measured in dollars because they are simply outside of that set of accounts, and hence incalculable, often literally and in a negative sense.

Most countries in the world have a border tax and many some quotas where America taxes its exports. Could someone intelligently tell me why reverting to the same system the rest of world is using would be bad for us.

Trump has convinced many of his supporters that America has been harmed by trade agreements. I have no idea if he actually believes that or not, but it was obviously a good thing for him politically, even if it is not true.

He has also convinced his supporters that America can “win” at trade agreements. This is also false. Trade agreements that promote free trade are a “win-win” for both parties. Otherwise there is no reason for both parties to agree to them. (I sure hope he doesn’t start talking about winning a nuclear war!)

Promising to bring back jobs that have been automated out of existence, or performed more efficiently elsewhere may get him votes, but those jobs are not coming back, no matter what he says.

It’s too bad that politicians have to lie to get elected; making false promises that they know can’t be achieved. It’s also too bad that voters believe the lies, and are subsequently disappointed in their politicians.

A free trade agreement isn’t an agreement at all, it is simply standing back and letting people trade as they feel, same as you yourself do for the rest of the world everyday unless you work for customs or the IRS.

You were fooled.

To win a trade agreement, a free trade agreement, is half honest at least, as you acknowledge you have a personal stake in the outcome, that you want trade tailored a certain way around some free trade, and it has been commented that unless all trade is free, even a ‘free trade agreement ‘ is not in total ‘free’.

However to say win-win, as in Paco trades a tomato for Joe’s apple and both are happy now, is BS, as they aren’t interested in writing down laws beforehand. What is more, if Paco and Joe dislike each other for some reason, they won’t trade until Corp. packages the items and places them on the shelf of their respective supermarkets with ‘ origin unknown but cheaper’ tagged on. Paco and Joe turn liberal out of political gratitude but without knowing how it bought their vote, start dressing so odd they don’t recognize each other, vote for Soros, and are now Antifa setting fire to Starbucks because Trump is gonna build a wall to seperate them, that because Joe’s neighbours don’t like the influence Paco has on him.

I don’t see any long term decline in manufacturing jobs at all, but I do see a precipitous drop starting around 1999, the same year the American financial industry and foreign banks started getting very creative with innovative financial products. And a little thing called a housing bubble began to grow. These are all related. Comparative advantage and cost of labor are useless in explaining how millions of jobs could have been sent overseas in a matter of years. Do you know what does explain it? The number of banks all over the world that get more and more opaque the deeper you look into their books. What happened to the American economy lies hidden in those murky transactions that now won’t go away, and are just waiting for their worthlessness to be exposed. The crisis to come will be the reverse side to those heady days when Greenspan seemed like a genius.

We need NAFTA for effective trading like the UK needs the EU. Brits voted for Brexit because they didn’t want unelected bureaucrats deciding their fate. Likewise, we should not have another layer of NAFTA bureaucracy between trading partners, as it makes it ripe for govt fraud, waste, and abuse.

You keep talking about the 6 years the curve went flat after NAFTA started, and ignore the rapid decline afterwards like NAFTA was still not in effect. It likely took 6 years to relocate all the factories to Mexico.

NAFTA is not to blame for all our problems and neither is going off the gold standard, but govt and career politicians are the source of the problem and NAFTA is a govt negotiated program. Our businesses can negotiate much better on their own. Who knows, we may start growing corn for food again.

Sending Mexico US subsidized glypohsate (Roundup) laced corn may not be the best for Mexico. If cheap US imports have harmed Mexican domestic corn production then increased Mexican production as a result of higher import prices could be good for them in the long run.

Public Citizen’s Global Trade Watch has issued a new report, NAFTA at 20: One Million U.S. Jobs Lost, Mass Displacement and Instability in Mexico, Record Income Inequality, Scores of Corporate Attacks on Environmental and Health Laws. The report compares the promises with which NAFTA was sold with the results we can measure 20 years later.

NAFTA was not just a “trade” agreement. Trade agreements focus on cutting tariffs and easing quotas and barriers to goods moving across borders. The report points out that NAFTA was much more, giving corporations special rights, incentivizing offshoring and limiting regulation. As the report puts it,

“NAFTA created new privileges and protections for foreign investors that incentivized the offshoring of investment and jobs by eliminating many of the risks normally associated with moving production to low-wage countries. NAFTA allowed foreign investors to directly challenge before foreign tribunals domestic policies and actions, demanding government compensation for policies that they claimed undermined their expected future profits. NAFTA also contained chapters that required the three countries to limit regulation of services, such as trucking and banking; extend medicine patent monopolies; limit food and product safety standards and border inspection; and waive domestic procurement preferences, such as Buy American.”

Some of the effects of NAFTA that are highlighted in the report include,

$181 billion U.S. trade deficit with NAFTA partners Mexico and Canada,
one million net U.S. jobs lost because of NAFTA,
a doubling of immigration from Mexico,
larger agricultural trade deficits with Mexico and Canada,
and more than $360 million paid to corporations after “investor-state” tribunal attacks on, and rollbacks of, domestic public interest policies.

The data also show how post-NAFTA trade and investment trends have contributed to:

middle-class pay cuts, which in turn contributed to growing income inequality;
how since NAFTA, U.S. trade deficit growth with Mexico and Canada has been 45 percent higher than with countries not party to a U.S. Free Trade Agreement,
and how U.S. manufacturing and services exports to Canada and Mexico have grown at less than half the pre-NAFTA rate.

The report lists and details many, many more such outcomes.

“NAFTA’s actual outcomes prove how damaging this type of agreement is for most people, that it should be renegotiated and why we cannot have any more such deals that include job-offshoring incentives, requirements we import food that doesn’t meet our safety standards or new rights for firms to get taxpayer compensation before foreign tribunals over laws they don’t like,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

American Majority Opposes NAFTA

The report also points out that the public “gets it” that NAFTA hurt the country.

“According to a 2012 Angus Reid Public Opinion poll, 53 percent of Americans believe the United States should “do whatever is necessary” to “renegotiate” or “leave” NAFTA, while only 15 percent believe the United States should “continue to be a member of NAFTA.”

Hi Mish:
I have enjoyed and benefited from your conversations with Chris Martenson and recently signed up to follow your blog.

I have a serious, not a rhetorical question for you regarding the subject of this post. It is obvious that at least some of the parties who trade benefit from the trade…otherwise they would not trade. I take that as a given.

However, it does not follow that the whole society benefits from trade. Government (at least in theory) exists to benefit all citizens, not just a few. So I think it is entirely appropriate that we take a look at all our trade agreements and determine whether or not they are benefiting our country as a whole.

So, my question: can you point me toward empirical proof that the entire U.S. society has benefited from NAFTA? Likewise, is there empirical evidence that Mexico and Canada as a whole have benefited?

Given the recent decline in life expectancy in the U.S., perhaps we need to focus more strongly on non-economic measures of progress and not simply assume that the whole society benefits from what we are pleased to call “free trade”.

Hi Bruce, there can never be empirical proof of any such question. The reason is that it is impossible to prove what would have happened otherwise.
Instead, all we can do is look at the vast preponderance of evidence and draw logical conclusions. Trade is a win-win situation. Lack of trade cannot be a win-win situation whether or not we can put a precise price tag on it. Government may, in theory, exist to exist to benefit everyone, but in practice, it doesn’t. Public unions getting in bed with politicians to benefit each other (votes for favors) is a prime example.
Mish

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